Loan is an asset to any financial institution. A bank normally maintains more than 60% of its loan portfolio under working capital. That is why it is very much necessary to ensure that a working capital loan does not become bad as it is normally not secured by other collateral security. These types of loans are secured by current assets and that are in the possession of the borrower themselves.
Hence, it is very crucial to make analysis of working capital before disbursement. The first step in ensuring a good loan is to ask for proper documentation of the loan applicant. Lending money is one of the main functions of a Bank. In the lending process, selection of borrower is the most crucial and vital job for a banker. In addition, objectives of the credit department are managing credit exposure of the bank, maintaining credit risk, compliance of Nepal Rastra Bank, recovering or collecting dues of loans and advances. If the loans become bad, then it effects the whole financial position of the bank. This program aims to provide the participants the knowledge and skills that help them to reach sound, reliable judgment of borrowers’ creditworthiness, understand every aspects of analyzing and managing Working Capital Loans.
The recent draft guidelines issued by NRB on working capital also explains the need for making the working capital lending more transparent and effective on its purpose and utilization.
